Bull Market Bitcoin: BTC Price Resets after 7% April Dip

Bitcoin (BTC) is undergoing a reset in various key metrics as the price drop flushes out leveraged positions. Currently trading around $66,000, BTC/USD has seen a 5% drop in just one hour. Although Bitcoin has experienced a 7% decline in April, a retest of support is having a positive effect on the overheated market. This drop has led to a major liquidation event totaling $400 million for Bitcoin and altcoins combined. As a result, funding rates have turned negative, indicating a decrease in leverage. Popular trader Jelle noted that all leverage must be destroyed before price discovery can occur.

QCP Capital, a trading firm, acknowledged the significant change in the funding landscape caused by large liquidations on retail-heavy exchanges like Binance. This caused perpetual (perp) funding rates to shift from as high as 77% to flat. Forward curve rates remain elevated, leading to the question of whether this current move will bring the entire curve back down. The relative strength index (RSI) for Bitcoin on daily timeframes has returned to the 50 midpoint, which is significant during uptrends. The preservation of this level has been a characteristic of Bitcoin since January, indicating its strength in an “overbought” state.

Regarding volatility, Bollinger Bands on daily timeframes suggest a potential pre-breakout phase for BTC/USD. Analyst Matthew Hyland compared the current situation to February, noting that the Bollinger Bands are tightening to levels not seen since the price moved from $45,000. This indicates a potential upcoming increase in price volatility. In late December 2023, RSI and Bollinger Bands were already suggesting the need for an acceleration of the bull market.

Bitcoin is resetting key metrics as the price drop leads to a cleansing of leveraged positions. The current retest of support has a positive impact on the market. Liquidations totaling $400 million have caused funding rates to turn negative, signaling a decrease in leverage. While the recent drop has compressed perp funding rates, forward curve rates remain elevated. The RSI for Bitcoin on daily timeframes has returned to the 50 midpoint, while Bollinger Bands suggest a potential pre-breakout phase. These changes indicate potential volatility and the need for an acceleration of the bull market.